Economic Systems: Capitalism vs. Socialism

These flashcards cover key concepts related to economic systems, particularly the differences between capitalism and socialism, and introduce important terms and definitions relevant to the discussion.

Capitalism

An economic system that relies on decentralized decision making by individuals voluntarily engaging in exchange in markets.

Socialism

An economic system whereby exchange is tightly controlled by a centralized government.

Willingness to Pay

The maximum amount a person will pay for a good or service.

Net Benefit

The difference between the benefits received and the cost incurred by a consumer.

Positive Profit

When the revenue received from selling a product exceeds the cost of producing it.

Per-Capita Income

The average income earned per person in a given area.

Public Policy

Actions taken by public officials that impact society.

Property Rights

Legal rights to own, use, and manage property.

Economic Freedom

The ability of individuals to control their own economic resources and make their own economic decisions.

Market Forces

Economic factors that affect the price and availability of goods and services.